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19 Dec 2002 : Column 1054—continued
3.34 pm
Bob Russell (Colchester): I congratulate the hon. Member for Hornchurch (John Cryer) on his comments about the medal and hope that he achieves his aim. I also support what the hon. Member for Tooting (Mr. Cox), who made an excellent speech, said about the Jubilee medal for prison officers. I hope that the Minister will take on board the needs of those in the retired officer corps who served king, queen and country for 30, 40 or 50 years. Technically, they are civil servants, but they must be the only civil servants who serve in uniform. It was pretty mean minded that those people and the prison officers were deemed unsuitable recipients of the Queen's Jubilee medal.
I welcome the opportunity to speak in the debate and hope that the Minister and his colleagues take on board my concerns about important issues to do with roads in my constituency. Perhaps in the spirit of joined-up government we will get the results that the people of Colchester want.
Those of us who represent constituencies in the east and south of England know that for the last half century successive Governments have decreed that our communities must take increasing numbers of new populations. The only question is whether local councils are allowed the freedom to decide roughly where the new developments take place. The county of Essex has had more than its fair share of urbanisation. Indeed, more land has been urbanised in Britain's oldest town in the past 40 years than in the previous 2,000 years, from the time when the Romans arrived and made Colchester the capital. That cannot continue, but if we do release additional land for development, we should let the local community determine where it should be.
The problem is that central Government are delaying the connection of a road link between Colchester's northern approach road and the A12. The developer and the Highways Agency are unable to agree where to put the junction. The irony is that the main developer is the national health service and the second largest landowner is Colchester borough council. The greatest length of the road is virtually complete and only the last section leading to the A12 has to be finished. In answer to a parliamentary question in July, I was assured that just a few of the finer details needed to be resolved, but when I asked a virtually identical question two weeks ago—some five months later—I was told that those issues have still to be resolved. That comes at the end of a 10-year debate that has been going on since the land was released.
The project is important to the NHS because it affects a former mental institution, which is part of a large landholding in north Colchester. There are also massive new developments in the garrison and the Hythe urban regeneration area, so not just one part of town is affected. The borough has carefully planned where it must absorb the new housing and other development that successive Governments have said we must have.
With the closure of large mental institutions under previous Conservative Governments and the Labour Government—there is no political divide on that—the NHS has had to dispose of those institutions, realise the assets and reinvest the money in the health service. The NHS, which is one arm of government, has to sell off surplus land and reinvest the money, but the Highways Agency, which is another arm of government, has not reached an agreement with the developer, which is the NHS or whatever the privatised wing of the landholding part of the NHS is called. I urge the Minister and his colleagues to get to grips with that. The big loser is the development in that part of north Colchester. If it does not go ahead there, it will be moved somewhere else. As we will get it one way or another, we might as well have the development where it will benefit, rather than disbenefit, the community.
I have mentioned the borough council and other landowners. Some of us would say that if the scheme does not proceed, an even bigger loser would be Colchester United football club. The new stadium for the club is an integral part of the development. In a week when two smaller clubs have gone into administration—Port Vale and York City—I am sure the Minister will appreciate that the smaller clubs need all the help that they can get. We do not want to be kicked in the teeth.
I take the opportunity to place on record my appreciation to the chairman of Colchester United, Mr. Peter Heard, who by my reading of the balance sheet must be putting in about #10,000 a week to keep the club going. As a keen Ipswich Town supporter, Mr. Deputy Speaker, you will know that my club can survive only by moving to a new purpose-built ground with modern facilities. I urge the Minister to take the message back to his colleagues that this is one road junction that the local community wants.
I move on to a road junction that the community does not want. Although this may be a constituency issue, I ask hon. Members to listen carefully to what could well be a national precedent if the junction is allowed to proceed. Those of us who represent urban constituencies can visualise our neighbourhoods as areas of streets built 100 years or so ago, mainly terraced or semi-detached houses close together, some with small front gardens and some without, but in virtually every case no off-street car parking.
I have an area of Colchester known as New Town ward, which I had the honour to represent on the council for 31 years. In this area there are backland allotments that can be reached only by a narrow track. Vehicle access to serve an estate on this privately owned allotment area is being acquired by stealth—that is the only way to describe it—by a local property speculator. The only way to gain access is down the track, which of course does not meet highway standards. The speculator has come up with a cunning wheeze to overcome that slight problem.
Up till the summer of this year, every time an application was made for residential development on that backland, Colchester borough council rightly refused it for a variety of reasons, one of which was inadequate access. The solution is simple, my friends. The developer has comes up with a scheme that encloses half the width of the road in front of a dozen or more houses, turning a two-way road width into a single width, and builds out the pavement where the narrow access is, in front of houses on either side, thus creating the sightline that he cannot otherwise obtain.
Those of us who have been in local government long enough know that usually, when a developer wishes to develop a piece of land that he does not own, he has to buy up property to get the sightline, and he has to acquire what is known as the ransom strip. The value of the ransom strip, according to a formula, can be anything between a third and a half of the value of the development land. In this case, the developer, with the acquiescence of the local highway authority—I hope that that will change, because of the national precedent that would be set if the scheme were allowed—is acquiring part of the Queen's highway at nil cost to himself, other than the cost of the roadworks. That is land that would cost more than #600,000 to buy. That is the low estimate; other estimates put the value at nearer #1 million.
Surely it cannot be right that the Queen's highway—public land—can be appropriated in this way by a private developer in order to secure access to his land by taking the road from in front of other people's houses, which he does not own. The national precedent is such that I have already been approached by the PR consultant of one of the national building companies, who said, XPlease let me know what the outcome is.
I think my clients would be interested." I bet they would. All of us who represent constituencies with such backland development must be fearful.If appropriating the public road is now part and parcel of what a property developer can do in Colchester, hon. Members can rest assured that the big boys will do it elsewhere in the country. It is a worrying precedent, and I urge the Minister to make sure that the matter receives a full public inquiry. I am talking not about the principle of development on the allotments, but about a private developer appropriating the public highway to secure a development, which he could not otherwise do because he does not own all the land or have control over it.
3.45 pm
Ross Cranston (Dudley, North): It is a pleasure to follow the hon. Member for Colchester (Bob Russell). He and I worked on a serious issue that arose in his constituency, and although I was not able to produce a result that was completely satisfactory to him, the only fault that I could see in the hon. Gentleman was his misjudgment in changing political parties. I hope that the House will forgive me if I do not follow the hon. Gentleman down his highways and byways, but he has raised a serious issue about the appropriation of public land.
I want to talk about corporate governance, because it is an issue that we rarely address in the House. There is an inverse relationship between economic success and the exposure of corporate wrongdoing. When times are good, the forces leading to the discovery of wrongdoing are weak, but with an economic slowdown, bad practice comes to light. In extreme cases when businesses become insolvent, outsiders such as liquidators start to pick over the bones, and sometimes the carcase is not a pretty sight.
Let me begin with the assertion that this country cannot be complacent about our standards of corporate governance. When the wrongdoings of Enron and WorldCom came to light in the United States, the reaction in some parts was that this country did not face the same problems. For example, our auditors did not have a tick-the-box approach, but adopted a more rounded assessment of a company's health. That might be true, but it is not an excuse for inaction.
We have a great deal to learn from the United States in adopting good standards of corporate governance. They have thought about it more than we have. The American Law Institute's two-volume XPrinciples of Corporate Governance" contains a great deal of valuable learning. The Americans also have much more practical experience than we have. After all, they introduced anti-competition legislation more than a century ago in the Sherman Act of the 1890s. They were the first to introduce a sophisticated securities regulation regime in the 1930s. They introduced a foreign corrupt practices Act when we in Europe had barely thought about the problem. Now, they have the Sabanes-Oxley Act.
Unlike the hon. Member for Sutton Coldfield (Mr. Mitchell), I come to praise my right hon. Friend the Secretary of State for Trade and Industry, not to
bury her. She has given a lead in addressing problems that have arisen in this country as a result of Enron and WorldCom. She established the Co-ordinating Group on Audit and Accountancy to look at matters such as auditor independence, financial reporting and auditing standards. Although an interim report has been published, the final report will not be published until early next year and I hope that it will address matters such as audit firm rotation.Nor has the rest of Government machinery been idle: the Financial Services Authority has been reviewing the listing rules and addressing auditor independence issues, and the Office of Fair Trading has looked at competition. For example, there was concern about the increased concentration and supply of audit and accountancy services. The OFT inquired into that, but has found nothing to act on for the present. As a result of the OFT report on competition in the professions, certain anti-competitive practices of the accounting and auditor professional bodies have been removed.
Business itself has not been idle, either. The Business and Society report published earlier this year—the second report on corporate social responsibility— pointed out that CSR has become part of the culture of many organisations. I am not one of those who will not give credit where it is due. When corporations adopt good practices, we should praise them for doing so. For example, in respect of financial services, the so-called FORGE group has produced guidance on corporate social responsibility management and reporting. The Pensions and Investment Research Consultancy has led the campaign for more independent directors of companies to run audit committees. Again, we can learn from the American experience, as the most recent PIRC report pointed out that the New York stock exchange regulations are tougher in requiring a fully independent board. Incidentally, the PIRC reports also provide a useful monitor on the cash emoluments of directors, to which I shall return in a moment.
However, while I applaud business initiatives in this area, we also need legislative action. Without basic legislative standards, there will be a temptation to slackness and sin to which some will succumb. On general legislative standards, I shall start with company law. Our company law has been built up by an accretion of provisions over the past century and a half and contains arcane provisions on, for example, the reduction of corporate capital and financial assistance to companies in the purchase of their own shares. Lawyers such as me have made money out of advising on those provisions, but frankly, they do not contribute to economic progress and a thorough review is needed.
I welcome the first stage of that process as it is set out in the White Paper XModernising Company Law", which was published earlier this year, and I should like to flag up two provisions in that regard. On the disclosure of information, there is a proposal for an operating and financial review that would set out the environmental and social impact of companies. My hon. Friend the Member for Ilford, North (Linda Perham) and other hon. Friends have tried to refine that proposal, but I welcome it in principle. In addition, the White Paper talks about codifying directors' duties. Although there is some ambivalence among corporate and company lawyers about that proposal, I certainly
support it. I also support extension of the duty of directors to all of a company's stakeholders and not simply a limited number.Historically, our company law has tended to emphasise the disclosure philosophy—the notion that, if information is disclosed to shareholders and others, it will act as incentive to good practice. However, we need enforceable standards as well. For example, my hon. Friend the Member for North-East Derbyshire (Mr. Barnes) spoke about the relationships between franchisers and franchisees in the business community. We need enforceable standards in that area. On phoenix companies, I am sure that many hon. Members have had the same experience at the consumer end of the market and have seen companies come along, perpetrate bad practices and then dissolve themselves. Often, the directors will start another corporation the next day to carry on the same practices, so we also need controls in that area.
I should like to spend a little time on three specific areas of direct regulation. First, let me give two statistics on director remuneration. In 2000, directors' pay rose on average by about 28 per cent., while shareholder return fell by 11.5 per cent. That does not go down well with the public. Moreover, in the past 18 months or so, we have seen examples of directors receiving golden goodbyes—in some cases, they have been paid as much as #7 million—after presiding over spectacular corporate failures. Marconi is the most often cited example of a company in which employees have lost their jobs, but directors have walked away with very substantial sums. We need to do something about that.
Earlier this year, the directors' remuneration report regulations went through the House. They take a naming and shaming approach to directors' remuneration. The idea is that the performance conditions for directors' pay will be disclosed and that performance graphs will be produced for shareholders. The latter will also have some say about the report on remuneration. However, in a spirit of seasonal cross-party agreement, I welcome the principle behind the private Member's Bill that the hon. Member for Tunbridge Wells (Mr. Norman) promoted. He proposes to deal with the problem of directors walking away with golden goodbyes by providing for the law to override the contracts that may legally entitle them to such a payment.
Secondly, I want to consider corporate killing. Approximately 18 months ago, on 10 July 2001, I obtained an Adjournment debate on the topic. Several hon. Members have mentioned the issue, which arose in the context of catastrophic events such as the Herald of Free Enterprise disaster, the King's Cross fire, and the rail crashes at Clapham, Southall and Ladbroke Grove.
The law of corporate manslaughter cannot deal with the matter. Perhaps it can do so in the context of small companies, when directors can be identified with their behaviour. However, it cannot deal with large companies. The Law Commission reported on the matter in 1996 and the Labour party's manifesto commits us to a law on corporate killing. I appreciate the difficulties; for example, if corporations are guilty of the offence, does liability follow for directors? There are also other practical problems. However, it is high time that we took action on an ageing Law Commission report.
Thirdly, I want to consider whistleblowing. The Public Interest Disclosure Act 1998, in which I played a small part, provides the country with an adequate law. It began as a private Member's Bill, which the hon. Member for Aldridge-Brownhills (Mr. Shepherd) promoted. Consequently, we have an advanced legal framework to deal with whistleblowing. However, the practice does not appear to be adequate in some private and public sector organisations. If PIDA is invoked, it has failed, because it is designed to change the culture of businesses and public bodies so that they welcome employees' disclosure of practices that may lead to fraud, health and safety offences or other wrongdoing.
I want to raise a specific case, which I would like my hon. Friend the Parliamentary Secretary to examine. It involves British Transport Police, for which I understand the Strategic Rail Authority is responsible. An appeal to the Court of Appeal was recently abandoned and the case is therefore no longer sub judice. I have read the two employment tribunal decisions and that of the employment appeal tribunal on the case. Something about it has featured in the press, and I know little beyond what I have read.
It appears that a lawyer called Irene Bhadresa blew the whistle on an inspector in British Transport Police who had thrown 75 live prosecution files in the bin. I understand that he resigned from the force before disciplinary action was taken. Meanwhile, Miss Bhadresa was dismissed. British Transport Police ultimately made a substantial payment to settle her claim. In fact, The Guardian reported that it was over #250,000, so clearly BTP was wrong to dismiss her.
As important as that individual case is what was uncovered about a force order promulgated by BTP, which apparently required all members of that force to inform their commanders if they were to give evidence in support of other members of the force or BTP employees such as Irene Bhadresa and that any character evidence given must not bring into question the integrity of members of the force. Is that general order still in force? We in the House recently legislated to bring police officers within the protection of PIDA. If there is such a general order still in force, it seems to me that it is contrary to the spirit, if not the letter, of what we, as legislators, have said.
For me, there remains only to wish season's greetings to you, Mr. Deputy Speaker, and to all those who work in the House and give us such good service as Members of Parliament.
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